Want to Send the Right Message? Listen to Your Stakeholders
First Quarter 2013
Corporate Board Member
by Kimberly Crowe
It used to be that it wasn’t so hard for a company to pacify its key stakeholders—investors, customers, and employees—even in moments of crisis. Now, that group has grown to include regulators, politicians, watchdogs, and the public at large. Couple that burgeoning audience with the relentless rate at which information is delivered, and in just a few days after bad news hits, reputations can be destroyed, market value diminished, and morale trampled. In short, a strong communications strategy has never been more critical.
In this fast-paced new era, companies must consider “the interrelation of stakeholders, the speed with which their perceptions of companies are changing, and the volume of data [available] on companies” in their quest to stay ahead of the curve, according to FTI Consulting’s Raoul Bhavnani.
And that’s where directors must step in and chart the company’s course. In a recent article, Bhavnani and his colleagues, Bryan Armstrong and John Watts, stated that in today’s volatile and interconnected world, any message can easily misfire and, thanks to the electronic media, find itself careening around the globe, stirring up trouble as it goes.
As a result, “social media must absolutely be top of mind for companies,” Bhavnani says. While a number of companies are embracing the medium, especially those in consumer-facing industries, he explains, others are burying their heads in the sand. “Those that are struggling are more business-to-business industrial companies, whose reputations can [nonetheless] be hugely driven by the public, a group to whom traditionally they’ve not had to sell.”
Bhavnani and his colleagues recommend a strategy that brings a company closer to what its stakeholders are thinking so it isn’t caught off guard when their opinions change. One problem is that in uncertain times, people are likely to respond to ideas and news more negatively than in prosperous times.
“If you look at the landscape of public opinion of institutions and corporations … the relationship, the trust between these various publics and large institutions—be it government, other institutions, or corporations—has definitely frayed,” Bhavnani says. “People are not as trusting in large institutions as they once were…I do think external stakeholders, and even internal stakeholders, are going to start from a position of lower trust than they would have even a short time ago.” Sometimes, the sheer volume of information available can impact a company’s ability to hear its stakeholders and, likewise, for stakeholders to assimilate the company’s important messages, FTI’s consultants note. To reduce the noise and sharpen their focus, companies need to conduct research and probe for what their stakeholders think before crafting their messages.
Bhavnani says companies are wise to keep in mind that “the universal truths on expectations have not changed—it’s more the velocity that has changed. Stakeholders are expecting information in a timely manner, and they are expecting to be dealt with fairly and transparently. They are pretty good at doing their own research, so they can sort out the spin versus the facts.” However, he cautions, “if the news is bad, they prefer to know it as opposed to waiting or feeling like it is somehow being obfuscated.”
Once armed with these insights, Bhavnani and his colleagues explain, companies can build and test scenarios to develop a set of messages for any circumstance. But a company can’t stop there—it must continually assess changes in stakeholder sentiment to be equipped to respond accordingly.
“Companies do need to communicate better,” Bhavnani says, “but they need to start from a position of strength, which is understanding what people think and what they expect. … Companies need to take the temperature on a regular basis of what their key stakeholders think and evolve that message.”
A good communication strategy can also positively impact the corporate bottom line, Bhavnani says, pointing to a case study where a company was able to reverse its fortunes with a bold vision and a long-term strategy that addressed investor and analyst concerns.
“If companies really want to compete, especially if their brand is important in the marketplace, they need to communicate openly; they need to be best in class if they want to be perceived at the top of the competitive chart,” he says. “Sometimes it can just feel like noise … but this stuff really matters.”